Modeling the determinants of tourism diversification: An empirical analysis for Australia

Abstract

This paper aims to use an augmented tourism demand model to examine the determinants of tourism diversification by using the data from 46 tourism markets and seven tourism activities in Australia from 1987 to 2021. The tourism markets in Australia have been further divided into sub-regions, and each region has been analyzed. The empirical evidence shows that an increase in the average income in the source markets and infrastructure investment in Australia increases tourism diversification. At the same time, the relative price effect appears to hinder Australia's tourism market diversification. Political risk has not been shown to have a significant impact on Australia's tourism market diversification. Policy conclusions and discussions related to the empirical results are presented in the main body of the paper.